International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

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Call for Paper Volume 8, Issue 5 (September-October 2026) Submit your research before last 3 days of October to publish your research paper in the issue of September-October.
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Volume 8 Issue 5
September-October 2026

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Fintech Competition, Bank Stability, and Risk-Taking: A Dynamic System-GMM Analysis

Author(s) Dr. Rachid Maghniwi
Country Morocco
Abstract The competitive challenge posed by neobanks raises a question that reaches beyond profitability into the domain of financial stability: does intensified competition from digitally native entrants make incumbent banks safer or riskier? Banking theory offers opposing predictions, and the empirical answer is complicated by the persistence of bank risk over time and by the endogeneity of competition itself. This study addresses both complications through a dynamic panel model estimated by system generalized method of moments, applied to a secondary panel of banks observed over successive years. The lagged dependent variable captures the persistence of risk, while internal instruments derived from the panel's own structure address the endogeneity of competition. The estimates reveal a non-monotonic, U-shaped relationship between fintech competition intensity and bank stability: moderate competition is associated with declining stability as incumbents chase yield, but beyond a turning point further competition coincides with a recovery, consistent with a disciplining effect that prunes the weakest risk-takers. The Hansen test does not reject instrument validity and the absence of second-order serial correlation is confirmed, supporting the specification. The findings caution against linear readings of the competition-stability nexus and suggest that the stability consequences of neobank entry depend on where a market sits along this curve.
Keywords Bank stability; fintech competition; system GMM; dynamic panel; Z-score; risk-taking
Field Computer > Artificial Intelligence / Simulation / Virtual Reality
Published In Volume 8, Issue 4, July-August 2026
Published On 2026-08-28
DOI https://doi.org/10.36948/ijfmr.2026.v08i04.86579
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CrossRef DOI prefix of IJFMR is 10.36948/ijfmr

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